Venezuelan oil industry is still recovering from strike

Jul 12, 2004 02:00 AM

Venezuela's vital oil industry has yet to recover from a strike that began in late 2002 and everything suggests that
"it's not going to revive quickly," a representative of the International Energy Agency said in Brazil.
IEA oil-and-gas director Klaus Rehaag said in an oil-market analysis during a seminar in Rio de Janeiro that
Venezuelan production has plunged 500,000 bpd as a result of the sharp drop in investment in this capital-intensive
industry.

The IEA comprises the world's 26 most developed countries, all big importers.
"Production hasn't recovered," Rehaag said. "What's happened in Venezuela is that the international economy has
failed to invest." The country has not only halted investment in accordance with a natural decline of the wells, but
"is losing production" as well, he said.

Venezuela, an influential founding member of OPEC, suffered the paralysis of its oil industry for several months in
late 2002 and early 2003 in an attempt by opposition groups to force leftist President Hugo Chavez from office. The
Venezuelan government called the protest strike "sabotage" and ordered the firing of some 18,000 workers -- more than
a third of the company's employees -- who said they had joined a "civil strike."
"The international community is awaiting political stability to return before investing," Rehaag said, specifying
that lack of investment is most notable in exploration and drilling.

The Venezuelan government, which claims to be the victim of a national and international conspiracy, has repeatedly
said it has succeeded in restoring state-owned PdVSA production levels to those before the strike, some 3.1 mm bpd.